State Attorney General Eric Schneiderman would like you to believe that, after layer upon layer of post-financial crisis reforms, the banking sector is still an out-of-control mess and the average citizen is in desperate need of a crusader like himself to keep these legions of bad guys under control.
The absurdity of the argument only lends credibility to the claim being advanced by some people on Wall Street, and increasingly in Washington, that Schneiderman should be investigated, for leading possibly the most politicized law-enforcement outfit in the country.
Sources say the “investigate Schneiderman” movement is gaining traction among congressional Republicans, particularly in the House Financial Services Committee. One obvious reason: Schneiderman, a Democrat, seems to spare no expense in attacking critics of President Obama but hasn’t lifted an investigative finger when it comes to the sleaze involving fat cats in his own party.
The implosion of NY-based MF Global, where more than $1 billion in client money went missing after a series of risky bets, seems tailor-made for Schneiderman — but the firm was run by longtime Democrat and Obama fund-raiser Jon Corzine.
Critics suggest that Schneiderman’s reward for looking the other way on MF Global came when Obama appointed him to head a much-hyped task force to investigate mortgage-foreclosure fraud.
Meanwhile, the AG’s been happy to go after Wall Street conservatives like former AIG chief Hank Greenberg or execs like JP Morgan’s Jamie Dimon, who merely disagrees with Obama’s economic policies.
To be sure, banks have been complaining about the New York AG’s office ever since Eliot Spitzer figured out how to use the state’s Martin Act to pursue Wall Street misbehavior and advance his political career.
As Spitzer read it, the Martin Act gives the AG enormous powers to bring serious criminal charges without having to build as strong a case as required under federal law. His high-profile investigations into big firms like Merrill Lynch, as well as financial titans like Greenberg and NYSE chief Dick Grasso, won Spitzer first the nickname “The Sheriff of Wall Street” and then the New York governorship (before he was forced out of office after his hooker problem went public).
Many of Spitzer’s cases were indeed dubious. His charges against Grasso (that he improperly collected $140 million in pay) were thrown out of court. And nearly all of his charges against Greenberg were also tossed — but only years after the persecution forced Greenberg, one of the best risk managers in finance, out as AIG chief. Under Spitzer-approved management, the firm’s wild risk taking emerged as a key element in the 2008 financial meltdown.
Yet Spitzer had his moments. He built a first-rate case against Wall Street firms for hyping stock recommendations on companies that kicked back investment-banking fees, and he drew attention to sleaze in the mutual-fund business.
It’s hard to give any such credit to Schneiderman. He’s a former state senator and lawyer with an alarmingly paper-thin résumé, which makes his current crusades against the big banks and certain financial executives all the more dubious.
In one of his“big” Wall Street cases, he continues to pursue the remaining, legally dubious, charges against Greenberg, some eight years after they were filed. Apparently, he sees a clear need to protect New Yorkers from the 88-year-old former AIG chief.
Likewise, Schneiderman believes the big bank JP Morgan needs to be held accountable for some sleaze during the financial crisis. Hmm. The case involves sleaze at Bear Stearns — the firm that the feds muscled Morgan into buying to help keep the financial system afloat in the 2008 crisis.
Sources tell me Greenberg’s been prodding Republicans in Congress to investigate Schneiderman’s activities — both his continual overstepping of his jurisdiction on issues that are supposed to be regulated by the feds and his nakedly political selection of cases.
Greenberg’s attorney, David Boies (another Democrat) tells me that Schneiderman’s case is nothing more than a “symbolic vendetta” and a “waste of taxpayer resources.” Schneiderman’s office maintains that the AG is merely “exercising his authority under New York law to hold people accountable for their actions.”
Yes, particularly if they’re Republicans or critics of his man in the White House.
Charles Gasparino is a Fox Business Network senior correspondent.